KakaoTalk Not Working: What Caused the Major Kakao Outage?

South Korea's leading messaging app KakaoTalk experienced a plunge in its shares on Monday after suffering a massive data center outage over the weekend that affected 53 million users globally.

A fire at the data center caused KakaoTalk not working, which affected other large Korean IT corporations. In addition to being the most popular messaging app in South Korea, KakaoTalk is also extensively used for a variety of online services, including ride-hailing, gaming, and online payments, as reported by CNBC.

South Korean Government to Investigate Outage

The largest online retailer in the world, South Korean platform Naver, saw a 2 percent decline in its share price before rebounding to close the day up 0.91 percent, while Kakao Corp. shares fell more than 9 percent initially before recovering to end the day down 5.9 percent.

In the second quarter, Kakao reported 47.5 million active users per month in Korea. This figure represents more than 90 percent of the population as there are now 51.74 million people living in South Korea as of November 1, 2021.

South Korean President Yoon Suk-yeol on Monday summoned relevant ministries to investigate the cause of the Kakao outage and formulate steps to prevent KakaoTalk crash from happening again. He believes that the consequences of the Kakao outage were "no different from the national communication network," and if the hazards are not resolved, South Korea's national security could be at risk.

President Yoon stated on Monday that structural steps from a countrywide level ought to be taken in the interest of the public " if there is a monopoly or oligopoly" scenario where it tries to control the market. In light of the Kakao service outage, the National Security Office has decided to establish a nationwide cybersecurity task force, the presidential office said on Monday.

Senior officials from the ICT and Defense ministries, the Supreme Prosecutors' Office, and the National Police Agency will attend a meeting of the task force led by national security adviser Kim Sung-Han to assess the cybersecurity situation regarding Kakao outage.

On Monday, both the administration and opposition parties swiftly stated that they would be preparing legislation in connection to the outage of KakaoTalk crash. The major opposition Democratic Party of Korea regarded the incident of KakaoTalk not working as a "national" calamity, while the ruling People Power Party saw it as a "human-made" disaster generated by "insensitivity" to security, per The Korea Herald.

Outage May Damage Kakao's Image

Analysts believe that Kakao will not take a significant financial impact from compensation, but that the company's reputation will take damage, leading some companies and customers to seek alternatives. According to Daol Investment & Securities analyst Kim Jin-woo, the impact on operating earnings is projected to be roughly 12 billion won. This is based on the presumption that the degree of damage compensation is limited to paying consumers.

Kakao announced a first-half 2022 operating profit of 330 billion won (US$229.74 million). In a filing with regulators on Monday, the company stated that after it had restored service, it would begin negotiations with SK C&C, the operator of the data center, to compensate Kakao and its core subsidiaries for damages.

CNA reported that the majority of Kakao's 32,000 servers, or the ones that lost power and were destroyed in the fire, were located in a single data center, the company stated on Sunday.